Alabama bill would forbid indemnity clauses in truck contracts

By Keith Goble, Land Line state legislative editor | Tuesday, March 13, 2012

An Alabama bill would outlaw an unfair provision attached to certain trucking contracts. Another bill at the statehouse would help cover the cost of upkeep along county roads.

Sen. Gerald Dial, R-Lineville, introduced a bill that is intended to improve fairness for truck drivers doing business in the state.

The bill would do away with indemnification clauses in trucking contracts. The clauses are set up to protect shippers or hold them harmless from anything that happens with a shipment.

A total of 31 states have acted to forbid the provisions in contracts. A new law in South Dakota takes effect July 1.

Supporters say that indemnification clauses require freight carriers to take on liability for the negligence of shippers. As a result, truckers are responsible for trailer packing, even though shippers actually do the packing.

They say the contract clauses are bad for the trucking industry, and they create a safety issue because the shipper’s incentive to perform its duties in a prudent and reasonably safe manner is eliminated.

The Alabama bill would prohibit provisions in motor carrier contracts that provide for shippers to be indemnified for losses caused by their own negligence and make them “void and unenforceable.”

Affected contracts are defined as “a contract, agreement, or other understanding” between a motor carrier and a shipper covering the transportation of property for hire by the motor carrier, entry on property to load, unload or incidental services, including the storage of property.

The protection would not apply to intermodal chassis, containers, or other intermodal equipment.

Joe Rajkovacz, OOIDA’s director of regulatory affairs, said indemnification amounts to somebody else using a trucker’s insurance to cover their negligence. He said the growing number of states to enact protections is welcome news for truckers.

“Shippers and receivers can’t be allowed to shift their insurance costs to truckers simply by using bullying tactics when contracting for service or holding truckers hostage when delivering their freight. This is a true example of ‘leveling the playing field.’ ”

Dial’s bill – SB219 – is in the Senate Judiciary Committee.

Awaiting consideration on the Senate floor is another bill that would use fuel tax revenue for “vegetation management” along county roads.

Alabama law now routes 4 cents of the state’s fuel tax collected for state and local road and bridge work.

SB185 would authorize using the 4-cent excise tax to control overgrowth and weeds on the rights-of-way of county roads.

To view other legislative activities of interest for Alabama, click here.